West European sunflower prices have experienced an increase, with the Vesper West EU Forward Price Index for Crude Sunflower Oil (dated November 6, 2023) rising to €869 or $932 per metric ton (FOB 6Ports – FOSFA 52, Jan-Feb-Mar) from €862 or $910 per metric ton during the same period last week. The primary reason for this rise is the inability of a substantial portion of spot volumes to reach Ukrainian ports. This disruption follows Ukraine’s recent implementation of mandatory registration for food export companies.
The introduction of mandatory registration is a strategic move aimed at curbing issues like tax evasion within the export of agricultural products, particularly those transacted through “cash-paid supply.” Ukraine is a prominent global food producer and exporter, but it is estimated that approximately one-third of goods meant for export are acquired via cash transactions without the mandatory tax payments.
A representative of Wilmar Ukraine noted on the issue “The cash market comprises a mix of unbranded small and medium-sized crushers and farmers, and its disruption has ripple effects throughout the entire market. Leading producers have secured their sales for November and December, as official oil transactions are typically arranged in advance. SPOT trading mainly operates on a cash CPT basis and is presently suspended.“
Another issue arises from the unauthorized hiding or postponement of foreign currency earnings in offshore accounts. Under the new guidelines, only businesses registered in the State Agrarian Register, subject to value-added tax obligations, and without any outstanding tax debts or foreign currency proceeds delays will be eligible to participate in exports. The mechanism said that vessels could be loaded only after a preliminary analysis of the legality of the grain’s origin.
In other news, both Russia and Ukraine have embarked on the new harvest season on a strong note. As of November 5th, Russia had harvested 14.2 million metric tons of sunflower seeds, a notable increase from the 10.2 million metric tons harvested during the same period last year.
Read more updates on the global sunflower oil market in our latest free highlights.